L&T adds ESG targets to residual tenure of BofA loan
ESG) goals into the remaining tenure of one of its loans from Bank of America (BofA), essentially agreeing to pay a higher rate in case it does not meet its water usage and greenhouse gas emission targets in that period. The $150-million loan, due in 2025, has a residual maturity of about two years, which will now be linked to the company's ESG targets.
«A higher interest rate will be charged on the residual maturity of this loan in case the company does not meet its sustainability targets,» said Shankar Subramaniam, India head of corporate banking at BofA. «By converting this existing loan transaction to a sustainability-linked loan, the company is showcasing its serious intent on achieving its sustainability target to investors and all other stakeholders.» L&T Group CFO R Shankar Raman said L&T is focused on achieving water neutrality by 2035 and carbon neutrality by 2040.
«This transition to SLL with Bank of America is yet another step in that journey and underlines our intent on the ESG front,» he said. BofA was the sole lender to the company.
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